VCs Hunt for the Next Unicorn on Snapchat
Entrepreneurs can forget about the elevator pitch. Instead, they should practice their Snapchat pitch.
Y Combinator is holding a contest on the app for young startups hoping to secure a $20,000 investment from the Silicon Valley business incubator. Companies can submit applications starting Wednesday, and Y Combinator partners will pick about 10 of the most promising ideas. Then each group will record a video pitch, which will be available for 24 hours as a Snapchat Story for anyone to view.
Justin Kan, a 32-year-old partner at Y Combinator, suggested the idea after connecting with promising entrepreneurs through Snapchat. He said at least three of the companies Y Combinator will fund in its summer accelerator class had originally gotten in touch with him over Snapchat. Kan has received Snapchat pitches in the past, which included emoji and finger-painted charts using the app's drawing tool.
Several tech investors have adopted Snapchat in the last six months or so as a way to reach millennials, who aren't readily tethered to e-mail and phone calls. Eager entrepreneurs can absorb near-daily Snapchat dispatches from Chris Sacca, an early Twitter backer; his Lowercase Capital partner, Matt Mazzeo; Mark Suster, managing partner at Upfront Ventures; Jason Calacanis, an early Uber backer; and Gary Vaynerchuk, a boisterous tech investor, YouTube personality and wine connoisseur. The posts tend to chronicle their glamorous jet-setting lifestyle or provide micro business lectures. Suster delivered a primer on Tuesday about employee stock options.
Kan got hooked on Snapchat in December after reading about DJ Khaled, a music producer and Snapchat star who got lost on a jet ski at night and Snapchatted the entire saga. Now, Kan posts videos daily for as many as 6,500 viewers, who tune in for answers to their business questions and life lessons. He refers to his style as "edutainment." In a post on Tuesday, Kan reflected on what he wished he'd done differently in and immediately after college. He recorded the musing while shirtless and riding an exercise bike in his garage.
"Some VCs might be like, 'That’s trivial,' but I think one of the most important qualities of an entrepreneur is to be a good storyteller," said Kan, co-creator of Amazon.com Inc.'s Twitch live-streaming app for gamers and on-demand house-cleaning service Exec. "You’re selling the story of your company to everyone you talk to—customers, the press, future employees, investors. Snapchat rewards people who can concisely make their point."
Embracing a hip communications tool like Snapchat could help Y Combinator remain relevant with a younger generation. "YC has a pretty good brand, but we're never asleep on it," Kan said. "How do we make sure all the entrepreneurs who want to build big companies know who we are? We have to be where they are, and a lot of younger entrepreneurs out there are on Snapchat." Willett Advisors, the investment arm for the personal and philanthropic assets of Michael R. Bloomberg, the founder of Bloomberg LP, invests in Y Combinator startups.
Y Combinator will accept submissions for the Snapchat pitch contest until May 19. The chosen few will be given access to Kan's Snapchat account for an hour each, when they will record and publish their pitches. After receiving feedback from Kan's Snapchat audience, Y Combinator will pick at least one winner to have an official interview with Y Combinator Fellowship, a program that offers convertible loans to very young startups.